DavidB. Wilkerson

CBS Radio sees auto ads driving revenue gains

CHICAGO (MarketWatch) -- CBS Radio sees ongoing revenue improvement in the third and fourth quarters of this year, led by a resurgence in automotive advertising, according to the division's chief executive.

"We believe that the advertising climate is improving, and the numbers are pointing that way," CEO Dan Mason said Tuesday in an interview.

In the second quarter, revenue at CBS Inc.'s
CBS, -1.25%
radio division fell 23% to $322 million, an improvement compared with a 29% decrease in the first quarter.

"And we expect to do better in the third quarter, and then better in the fourth," Mason predicted.

As he indicated in a May interview, Mason said there are fewer radio commercials available in the marketplace than the past and more demand for the spots that are for sale.

"Automotive has come back," he said. "We benefited from cash-for-clunkers, and we expect to benefit even more in the next round."

The federally-funded Car Allowance Rebate System, which began in late July, offers consumers up to $4,500 to exchange older, less fuel-efficient vehicles for new, more fuel-efficient ones. According to the U.S. Department of Transportation, more than 273,000 vehicles nationwide have been traded in through the program, usually referred to as "cash-for-clunkers."

Congress approved another $2 billion in funding for the program last week.

Movies and other forms of entertainment have also been consistently strong ad categories for the division, Mason said.

CBS Radio is also being helped by format changes, he said. About 20% of the group's stations have switched formats since early 2007.

Changes have lifted revenues at CBS FM stations in the top three U.S. markets -- New York, Los Angeles and Chicago.

KAMP-FM in Los Angeles, referred to as Amp Radio, continues to gain more listeners among adults 18 to 34 years old, as well as the traditional target audience, people 25 to 54. Improvement is also ongoing at Now FM (WXRK-FM) in New York and B-96 (WBBM-FM) in Chicago.

All three stations have been rebranded to CBS's version of the Contemporary Hit Radio, or CHR, format, which emphasizes newer Top 40 songs.

"The goal there was to put CHR formats in the top three markets, to make the clusters (of stations in those areas) a better advertising vehicle for 18- to 34-year-old women, which I think we've accomplished," Mason said.

Mason gives much of the credit for ratings improvement at the CHR stations to Arbitron's
ARB, -5.00%
Portable People Meter, or PPM. The device, about the size of a small cell phone, can track when and where participants listen to radio or watch television, as well as how they interact with other forms of media and entertainment.

The meters are designed to replace the traditional method, in which people write down what they listen to or watch in a diary.

While some groups oppose PPM on the grounds that it allegedly undercounts minority listeners, Mason says it has proven invaluable in counting young people, who are usually thought to have bypassed radio in favor of MP3 players and Internet-only stations.

Before its rebranding, New York's WXRK had a cume of about 1.4 million listeners. Cume is the number of different persons who listen to a station at a certain time of day for at least five minutes. "Now it's just about doubled. Those are brand new people listening to a new radio format," Mason said.

"In the '70s, there were always two CHR stations in the big markets," he explained. "It had reached a point at which many of those markets had gotten down to only one. Now that format is being revived, because the measuring system is showing that younger people are listening to the radio."

Format changes can be difficult. When CBS Radio announced in July that it would turn Boston's WBCN, a legendary rock station in the area for 40 years into a sports talk outlet, many listeners who grew up with the station were outraged, posting angry comments on newspaper and blog sites.

"I do believe that 'BCN has obviously been a great radio station," Mason said. "It has been a tradition in that marketplace for so many years. But things are changing.

"[Boston's] become a market, I thought, that's oversaturated with rock music. So the opportunity was there to do a sports talk station, and we took advantage of it."

Mason explained that decision was partly based on the great success CBS Radio has enjoyed with WXYT-FM in Detroit, which eventually became the one of the highest-rated stations in the market after it was switched to a sports-talk format in 2007. The division later brought FM sports to the dial in Baltimore and Washington D.C.

Sports talk stations have great appeal to men 25-54, an audience many advertisers see as important. "Traditionally, the format does really well in automotive, with financial institutions and telecom," Mason said.

In contrast, CBS Radio has in some cases brought back older, traditional formats and call-signs that large groups of listeners had missed, such as WCBS-FM in New York and B94 in Pittsburgh. Every situation is different depending on what formats currently exist in a market, Mason said.

"It's just impossible to paint this thing with one brush ... In New York, we thought the oldies station, WCBS-FM, would do very well because it had a strong brand, and it did. The dynamics of the marketplace dictate whatever decision you make."

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